1975 (6) TMI 25 - AT - Income Tax

Summary

Issues Involved:
1. Liability under Section 32(1) of the Tamil Nadu Agricultural Income Tax Act, 1955.
2. Nature of property inherited by the appellant from his father under the Hindu Succession Act.
3. Applicability of Section 8 of the Hindu Succession Act to inherited property.
4. Distinction between ancestral property and self-acquired property.
5. Calculation of the appellant's total holding for tax liability purposes.

Detailed Analysis:

1. Liability under Section 32(1) of the Tamil Nadu Agricultural Income Tax Act, 1955:
The appellant, an agriculturist, filed a composition application for the assessment year 1968-69, which was rejected by the authorities. The authorities included the entire land inherited by the appellant, his mother, and sister in his hands, resulting in a total holding of 7.69 ordinary acres. The appellant disputes this liability, arguing that the inherited land should be treated as his individual property.

2. Nature of Property Inherited by the Appellant from His Father:
The appellant inherited 2.57 acres from his father's estate, who died intestate in 1959. The authorities considered this share as part of the appellant's family property, while the appellant argued it should be treated as his individual property. The appellant contended that under the Hindu Succession Act, the property inherited should be considered self-acquired and not ancestral.

3. Applicability of Section 8 of the Hindu Succession Act to Inherited Property:
The appellant relied on the Assam and Nagaland High Court decision in Ghasiram Agarwalla vs. CGT, which held that property inherited by a Hindu son from his father after the Hindu Succession Act devolves upon him as his self-acquired property. The Allahabad High Court in CWT vs. Chander Sen also supported this view, stating that property inherited under Section 8 of the Hindu Succession Act passes by succession and not by survivorship.

4. Distinction Between Ancestral Property and Self-Acquired Property:
The learned State Representative argued that the property inherited by the appellant's father was not self-acquired but received on partition. However, the Tribunal found that the distinction between self-acquired and partitioned property is not relevant under Section 8 of the Hindu Succession Act. The Tribunal concluded that the property inherited by the appellant should be treated as his individual property, not as family property.

5. Calculation of the Appellant's Total Holding for Tax Liability Purposes:
The Tribunal accepted the appellant's contention that the 2.57 acres inherited from his father should be excluded from his holding. This exclusion reduced the appellant's total holding to 6.41 standard acres, which is below the minimum holding liable to tax under Section 10(1) of the Tamil Nadu Agricultural Income Tax Act, 1955. Consequently, the appellant's holding was not liable to tax for the assessment years in question.

Conclusion:
The appeals were allowed, and the assessments were annulled. The appellant was entitled to a refund of the institution fee for each of the years under appeal.